In a big relief for the cryptocurrency traders, Indian banks have reportedly relaxed restrictions on cryptocurrency exchanges. In April-May this year, the Indian banks restricted banking services access to crypto exchanges due to an informal RBI diktat. RBI had to later clarify that no such restriction was imposed on the banks.
Due to the restrictions, some cryptocurrency exchanges faced problems in processing transactions while many investors complained that they were unable to transfer/withdraw funds from their Indian bank accounts.
The change in the stance of Indian banks is due to the clarification of RBI that banks cannot cite its April 2018 circular to warn against investments into cryptocurrency or deny access to banking services citing usage for cryptocurrency-related activities. The 2018 circular was struck down by the Supreme Court in March 2020 giving a new lease of life to the nascent industry.
“It is abundantly clear that now banks are more open to providing services to crypto exchanges. As India moves towards a more transparent regulatory framework for crypto assets, we will see more banks joining the party,” Shivam Thakral, chief executive of BuyUcoin, a cryptocurrency exchange was quoted by the Economic Times.
The move by the banks comes at a time when the Indian government is formulating a new cryptocurrency bill amid the surging popularity in Tier II and Tier III towns in the backdrop of Covid19 fueled trading activity.
The cryptocurrency enactment is delayed and the industry believes the government is finally taking measured steps than introducing harsh regulations at once. In related news, the government is considering compartmentalizing cryptocurrencies based on use cases.
However, not all banks are in the same line. A senior executive at a large bank quoted by Economic Times said that his bank had not opened its net banking or debit card channels to buy cryptos, but customers were using UPI channels that were outside the control of banks.